Fine Gael indicates change in USC pledge in government talks

Fine Gael has indicated it is open to dropping its election pledge of entirely abolishing the Universal Social Charge (USC) in negotiations to form a minority coalition government.

Acting Taoiseach Enda Kenny is currently hosting round table discussions with Independents and smaller parties with a view to forming such a government, and Fine Gael has circulated a document outlining areas for discussion.

The document contains a number of points under eight headings, which are: the housing shortage and homelessness; jobs and rural development; youth affairs and the elderly; management of the economy, the public finances and the labour market; health and disability; political and constitutional reform; climate change and the environment and crime prevention and justice.

Under the economy heading, Fine Gael lists “personal tax rates and the future of the USC” as a topic for discussion, indicating it is open to changing its election policy.

The party placed abolition of the USC at the heart of its election pitch, although its manifesto also contained proposals for a clawback mechanism for higher earners. Fine Gael’s USC policy was questioned during the campaign, with political opponents criticising it as an unaffordable move.

However Fine Gael sources have previously pointed out that the party is committed to bringing down personal taxes by reducing the USC. It promised in the election to reduce the 5.5 per cent rate by 1 per cent in the next budget.

Job creation

A senior Fine Gael source on Thursday said “low tax and the abolition of the USC” are job creation mechanisms that “remain a core Fine Gael priority”.

The source added: “Of course taxation would be a subject of discussion in the context of programme for government negotiations.”

Fine Gael figures have also said they want a new coalition to “navigate the centre ground” of Irish politics.

Other economic discussion topics outlined include “new tax broadening measures”, raising the prospect of higher taxes for some people. Fine Gael proposed in the election to reduce the level at which people paid PRSI from €18,000 to €13,000, to pay for benefits such as additional parental level and a widening of dental benefits.

The Fine Gael discussion document also indicates the party is open to establishing three new cabinet posts for the areas of housing, rural development and climate change. It refers to the need for “political leadership and implementation structures” in each of these areas.

Housing measures in the document include local infrastructure; tax and regulatory measures; the role of Nama; the property tax and site valuation; long term emergency accommodation; social housing investment; low income households in rental accommodation; affordable purchase; student accommodation; spatial planning, housing design and energy efficiency issues.

Other issues for discussion include childcare and supports for the elderly; a citizens’ assembly on future constitutional change, such as on the Eighth Amendment and state funding for smaller political parties.

It is understood consultant Lucy McCaffrey has been selected has been chosen as facilitator for the negotiations between Fine Gael and the Independent TDs.